The Debate on National Burden Rate

Toru Hashimoto Vice Chairman of the Board of Councillors, Keidanren Chairman of the Board, The Fuji Bank, Ltd.

In spite of the report that the Japanese economy grew at an annualized rate of 7.9% in the first quarter of 1999, most top business leaders are not optimistic about the data. Many in this country and abroad believe that Japan is still a long way from a full-fledged economic recovery. The public's uneasiness over the uncertain future underscores the reason for managers' aversion to invest in capital spending and consumers' reluctance to loosen their purse strings. The government's fiscal policy in stimulating the economy is only a temporary fix, and it is essential to develop a well-defined economic outlook while the stimulative effects are still sustainable. In order to ease the people's anxiety, the government must be able to produce a convincing vision of the future supported by solid quantitative and analytical data. Without a distinctive vision, the constant application of ad hoc remedies is nothing but a futile exercise in fiscal policy.

The concept of national burden rate (tax and non-tax burden rate as a percentage of national income) plays a significant role in confronting business leaders as well as the general public in Japan with the reality that public services are made possible through a corresponding burden and responsibility. If we do not make any efforts to restructure our present system, it would be impossible to successfully maintain the structure of social benefits, annual expenditure and costs over the long term. Moreover, fiscal restructuring is also vital to maintaining Japan's credibility in the world.

In the debate on the national burden rate, it is necessary to address the following issues while developing a social infrastructure for the future based on a public consensus: (1) the publicly acceptable level of increase in cost burden and corresponding cut in social benefits, (2) decrease in national burden resulting from administrative reforms such as public works reform and central government reorganization, (3) measures to spur economic growth which in turn will lead to fiscal reconstruction, and (4) a sustainable social system with the focus on a social security system. It is in our best interest to find an effective remedy for Japan's socioeconomic ills as soon as possible.